Repay (NasdaqCM:RPAY) FY Conference Transcript

Summary of Repay (NasdaqCM:RPAY) FY Conference Call - November 20, 2025 Company Overview - Company: Repay - Founded: 2006 - Business Model: Embedded payments solution within enterprise software, focusing on consumer payments and business payments [2][3] Key Segments - Consumer Payments: Represents approximately 85% of the business, focusing on consumer invoices, particularly in sectors like auto lending and mortgage lending [23] - Business Payments: Accounts for about 15% of revenue but is a faster-growing segment, emphasizing accounts payable (AP) automation [35] Core Insights and Arguments - Growth Recovery: After experiencing negative growth for the first time in its history due to client losses, the company has shown sequential growth throughout 2025, with expectations to continue this trend into Q4 [10][11] - Normalized Growth Guidance: For Q4, Repay anticipates a normalized gross profit growth of 6%-8%, with expectations to exit the year closer to the lower end of that range [12] - Market Opportunity: The total addressable market is estimated at over $5.6 trillion, with significant opportunities in automating business payments, particularly in the accounts payable sector [17][35] - Digital Transformation: The company is capitalizing on the shift towards digital payments, with over 50% of payables still being processed via paper checks, indicating a substantial opportunity for automation [18] Operational Changes and Investments - Sales Strategy: Investments are being made in enterprise sales and sales development representatives (SDRs) to enhance client engagement and accelerate implementation cycles [13][14] - Technology Investments: Focus on leveraging AI to improve operational efficiencies and reduce implementation times, with expectations for returns on these investments to materialize by mid-2026 [15][16] - Dynamic Wallet Feature: A new solution that integrates consumer invoices into digital wallets (Apple Pay, Google Pay) is expected to enhance user engagement and payment adoption [25][26] Financial Performance and Projections - EBITDA Margins: The company has maintained high EBITDA margins, with a free cash flow conversion guidance of over 50% exiting 2025, despite some margin compression due to competitive pressures [46][48] - Capital Allocation: Repay has focused on share buybacks and debt repayment, with $38 million spent on buybacks and $74 million on debt reduction in 2025 [49] Market Conditions and Risks - Consumer Market Stability: The consumer market, particularly in used auto and accounts receivable management, has stabilized, with no significant changes expected in the near term [24][53] - Non-Discretionary Transactions: The nature of Repay's transactions is largely non-discretionary, which may provide some resilience against macroeconomic downturns [55] Future Milestones - Execution Focus for 2026: The company aims to demonstrate continued organic growth and successful client implementations as key indicators for future performance [56][57] Additional Insights - Competitive Advantage: Repay's full-stack processing capabilities, including its own clearing and settlement engine, provide a strategic advantage by controlling the entire transaction experience [37][38] - Real-Time Payments: The company is exploring the integration of real-time payment solutions like FedNow, although adoption is still in early stages [42][44] This summary encapsulates the key points discussed during the conference call, highlighting Repay's strategic direction, market opportunities, and financial outlook.